The HR Dictionary

Human Resource Audit

An HR audit is a thorough analysis of the HR practices, policies, and procedures of a company and finding problem areas and/or strategies to improve are the objectives. Usually there are two options for carrying out the audit: either engage an outside firm or give the internal HR department the go-ahead to conduct the audit themselves according to a set of guidelines. 

The objectives of the various HR audit types vary. Value creation and risk mitigation are the two key categories. Although you can carry out both kinds of audits at once, they will look at various parts of your HR procedures and rules. Risk reduction focuses mostly on areas where you run the risk of getting into legal trouble or leaving yourself vulnerable to employment-related claims. In order to maximize the value of your employees or recruit better people, value creation will primarily focus on areas where your procedures and policies can be enhanced.

Areas of Inspection for HR Audits

Below are a list of areas that HR audits focus on:

  • Compliance - Any leadership team in charge of human resources will want to ensure that they are in compliance. How well your company complies with current local, state, and federal employment laws and regulations is the main emphasis of an HR compliance audit. This audit focuses on risk reduction.
  • Best Practices - An audit of your HR procedures and policies against acknowledged industry norms is known as an HR best practices audit. A growing business can benefit immensely from this kind of audit because it helps make sure you're on the right road as you expand payroll, produce handbooks, construct job descriptions, and set expectations for your new hires.
  • Performance - A personnel profile review is part of an HR performance audit, which has the objective of assessing the caliber of feedback your managers are providing their workforce. Poor feedback can impede an employee's development. Before employee growth suffers, a performance audit can find issues with your review and feedback procedure.

An HR software usually aids in allowing HR departments to comply with legal requirements for areas such as data collection, privacy, etc. and also makes it possible to improve the overall efficiency and productivity of HR operations through multiple tools such as Performance Management, Time Tracking, Leave Management, Recruitment, and so much more.